The EU said member countries could choose to exempt small businesses from standard EU accounting rules if they meet two of the three conditions: if they have fewer than 10 employees, a balance sheet under €500,000 or a turnover of less than €1 million ($1.28 million).

This could save small companies €1,200 a year, and save the entire economy €6.3 billion, it said.

The rule change is part of the EU's economic recovery plan proposed last November. It will need the backing of EU governments and the European Parliament before it can enter into force. It does not affect separate national rules on accounting that come on top of EU requirements.

Small companies should still carry out basic bookkeeping to chart sales and purchases, regulators said, but they would not have to comply with more complicated accountancy rules aimed at large businesses that operate across several countries.

The European Commission said EU countries could require companies to file basic financial reports along with their tax forms to reduce the amount of paperwork small businesses need to do.

Small business group UEAPME said it was "unimpressed" by the proposal because it was not binding on all EU nations and other rules will continue to demand that companies file accounts to governments, banks, suppliers and customers.